Life Reinsurance

Reinsurance is a very common and indeed powerful tool that insurers can use in many parts of the organisation. It is used for a variety of reasons, including risk management, capital management, access to technology and services, and alternative asset strategies. And more.

Ultimately, the purpose of an insurer is to help its policyholders manage their own uncertain future financial risks. It does so by taking on those risks, pooling them to achieve diversification, and earning a return on the capital required to back the business.

To this end, the reinsurance strategy and framework of any insurer may have a significant impact on its ultimate performance, its business and risk profile, its capital position, and its ability to remain solvent and grow, and thus continue to meet its policyholders’ needs well into the future.

However, as a Working Party, we believe that reinsurance is not always optimised to support an insurer’s objectives, and may even destroy value through poor design and implementation.

Enhancing Reinsurance

This paper considers both a holistic framework for and the various elements of, the reinsurance strategy and implementation. While the paper is likely to be of particular interest to the purchasers and managers of reinsurance, it should also be of interest to a wide range of parties with an interest in the financial and risk management of both insurers and reinsurers.

Although we highlight a number of areas where we have observed that decisions or processes may be sub-optimal, this is done to provide a resource that will allow the use of reinsurance to be enhanced. We do not imply (nor do we believe) that reinsurance is fundamentally flawed, either in how it is bought or sold.
 

Read the full paper.

The L&H Reinsurance Working Party

The members of the Working Party include actuaries employed by insurers, reinsurers, and consultants. This diverse group allows the Working Party to present views from all angles of reinsurance transactions.  

As of January 2022, the members of the working party include:

Alexandra Manion, Arminder Kainth, Benoit Rio, Craig Gillespie, David Lipovics, Greg Solomon (Chairman), Kyle West, Niall Kavanagh, Peter Mannion, Ruud van Doorn, Tom Keel 

Previous Outputs of the Working Party:

• 'Enhancing reinsurance', Greg Solomon - Actuary Magazine December 21 Edition
• Life Conference 2018 presentation
• Reinsurance should be a tool, not a habit - Life Conference, 2015
• Life Reinsurance Working Party Infographic
• References for Relevant Reinsurance Resources.